Progress in trade connectivity: UN report
Bangladesh has made progress in supply chain connectivity, a UN report found.
The study focused on the extent of the country's facilitation of import and export processes as well as its access to efficient maritime services.
Bangladesh took the 137th position out of 179 in the ESCAP International Supply Chain Connectivity (ISCC) Index, a new index released on the occasion of the Asia-Pacific Trade and Investment Week last week in Bangkok.
Singapore topped the list, while Iraq appeared at the bottom, said the report released by Dhaka Chamber of Commerce and Industry in Dhaka yesterday.
Bangladesh's progress in enhancing supply chain connectivity from 2006 to 2012 has been similar to other countries in the South and South West Asian region.
The latest data from the ESCAP-World Bank database suggest that Bangladesh has made limited progress in reducing trade costs with its South and South-West Asian neighbours, with relatively more progress with East and North East Asia.
When tariff costs are excluded, trade costs between Bangladesh and the United States are only slightly higher than those between Bangladesh and some other South Asian countries, suggesting further room for intra-regional trade facilitation. Trade costs in the agricultural sector remained prohibitively high in most cases.
According to United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in 2012, the country's export growth was slightly above average for the Asia-Pacific region, while imports fell by over 5 percent compared to 2011.
This improved the trade balance from a deficit of 11 percent of GDP in 2011 to 8 percent of GDP in 2012, the data showed.
Exports are strongly dominated by the readymade garments sector, which accounts for approximately 93 percent of Bangladesh's total merchandising exports, the report said.
In recent years, Bangladesh has been receiving more interest from foreign investors with foreign direct investment inflows increasing from $700 million in 2009 to just under $1 billion in 2012, according to the report.
However, the country could do a lot more to attract investment as the share of inward FDI stock in GDP was far below the regional average in 2012.
Bangladesh's economy is slightly more open than average in terms of import penetration.
However, trade barriers such as MFN (most favoured nation) applied tariffs and restrictions to services trade are higher than the regional average. Bangladesh could also do more to facilitate trade as it currently takes almost 30 days to complete trade procedures, according to the report.
Export growth will stay below its historical rates of just over 5 percent in 2013 and 6 percent next year, due to an overdependence on large countries outside and inside the Asia-Pacific region, the latest Asia Pacific Trade and Investment Report said.
At the launch of the report, Bangladesh Foreign Trade Institute Chief Executive Mozibur Rahman said the country needs political stability for smooth business operations.
“The smooth movements of goods and people are needed for good connectivity. The roads and highways which are used for international connectivity should keep out of strike,” Rahman added.
DCCI President Sabur Khan moderated the event.